Investment Homes & AirBnB
Are you considering turning your rental into an AirBnB or Vacation rental? In this Arizona market right now, a 6 or 7% cap is considered average/good. 10% CAP is considered excellent for a long-term rental.Did you know that, the earning potential with a vacation rental can be 80% or more than that of a Long-Term rental? Now is the time to start investing in AirBnB properties because there isn’t a lot of major investors or hedge fund companies that are doing it. Realtor.com just announced Scottsdale as the #1 city in the US for short term rentals.
Seems like a no-brainer to start turning all your rentals into vacation rentals right? Not so fast. It can be a full-time job with just two AirBnB Rental Properties. Consider this, One AirBnB rental can occupy as much as 20hrs a week with the sales and marketing of the property, managing maintenance and upkeep, and communicating with guests. While there are some efficiencies like autoresponder software that can be used to help substitute some of the communication, it still requires a lot more time than a long-term rental. Watch my YouTube Video
For those of you that prefer good ol fashion text, below is more in-depth information on vacation rentals. Additionally, I’ve included some resources to help you get started if turning your investment home is right for you.
Google “top 30 neighborhoods in Arizona”
Finding the right location… A good place to start when house hunting for a vacation rental is finding the top 30 destination spots here in Phoenix. Research the top 30 neighborhoods. Understand what it is that’s appealing in those areas. Who your demographic will be. This will be important for marketing your property. To coincide with these area’s you should use analytical tools to help you evaluate income potential.
Analytical Tools to evaluate Income Potential & More
AirDNA.co: Gives you statistics and analytics on Airbnb rentals. Average daily revenue to analyze property value.
Mashvisor.com: A tool to decide the profitability of vacation home Need to edit expenses, and the occupancy. They also have a heat map showing hot areas.
The 3 D’s & an E of What makes a Profitable Vacation Rental
Dues: Ideally would be a location without a HOA. You need to limit the fee’s or expenses on a property. Additionally, many HOAs in Arizona have policies that say short-term rentals (under 30 days) are prohibited.
Destination: Location, location, location. Touchy feely factors, events, & entertainment
Design: Homes are designed to be lived in and relaxing. Vacation Rentals should be designed to be fun and vibrant. Perhaps with use of brighter or louder colors, entertaining maybe include a pool table or ping pong table, or horseshoes in the backyard.
Experience: Create a unique experience. That experience may be different for business travelers or family, or spring break visitors. For example, 1bed/1bth studio homes completely designed for Super Bowl near Glendale rented for $15,000 for the week of the Super Bowl when it was hosted at the Cardinals Stadium in Glendale. It was designed and decorated specifically with a Super Bowl theme. This unique studio home created an amazing experience for guests, which ultimately maximized their income. When marketing your property, sell them on how close you are to amenities, events, parks, and entertainment. However, remember with selling you to speak to the emotional benefits that these features bring. Don’t just talk about having these features.
ProTips:
- As mentioned in the video some of the cons of Airbnb vacation rentals is the additional maintenance and/or expenses such as more frequent, lawn care, pest control, handyman repairs, cleaning, laundry. Having relationships with different vendors and creating a system can help alleviate some of this time.
- Update your rates daily. There’s an algorithm that boosts your showing if you’re on it and making updates more frequently
- Have a photo you want the place to look after the cleaner leaves. This will help when there are different crews cleaning the place to keep a consistent feel and standard of cleanliness.
- Use both an independent contractor and a company. May get a better rate with Independent contractor, but not the availability of a larger company.
- Know the seasonality of your market. Here is Arizona, peak season February, March, April. Oddly enough July is a highly traveled month.
- Tuesday is the highest demand day for Airbnb, but lowest for hotels, adjust your rates accordingly.
- One of your biggest factors is your reputation. Be responsive, provide great customer service to receive better rankings which in turn will get you more exposure.
Hire the Professionals
Personally, I’ve rented out my personal residence through airbnb during the high season just to see what sort of extra cash I could make. I quickly found out, it requires a bit more work than I was ready for. It will force you to create systems in order to better manage your time. If you think you want to explore this route but don’t have the time to commit, hire a management company to handle your vacation rentals, reach out to Zach or Patrick at Vacay AZ. I highly recommend them. They are truly a local area expert with AirBnB or Short Term Rentals. Below is their contact information. They have mastered the process and can help you maximize your profit.
Patrick Tice |(602)359-3636 | Patrick@vacayaz.com
Zach Zinn | (623)251-0372 | Zach@vacayaz.com
